Railways to get on retail track with AVB group

Rajat Guha and Deepshikha Monga, TNNSep 20, 2006, 12.19am IST

NEW DELHI: The Indian Railways is all set to ride the organised retail boom. Even as it talks to Pantaloon, one of the first organised retail players in the country, it has now initiated talks with the latest retail player, the Aditya Birla Group.

This public-private partnership model will see the railways play an important role in the supply chain, a key determinant for expansion of organised retail in the country.

For its retail venture, the AVB Group is talking to the railway ministry to operate refrigerated containers to transport fresh farm produce. The group has also shown interest in setting up agri-commodities retail outlets at railway stations as well as warehouses and cold chains at surplus land with the railways.

Railway minister Lalu Prasad had in August said that the ministry would develop supply chain infrastructure for agri-produce, including warehouses and processing centres at railway properties. He had also invited private players to own and operate refrigerated containers to transport agri-perishables.

It is an offer that the AVB group is learnt to have taken up. The group is keeping retail plans under wraps and when contacted, the group spokesperson declined to comment. The importance for a robust supply chain mechanism for the retail player and sector can be gauged by the fact that India loses Rs 50,000 crore annually due to an inefficient vegetables and fruit supply system.

Through retail supply chains, the railways hope to double revenue in five years. "In recent years, road freight has taken revenues off the railways. Of about 400m tonnes of freight in agri-products, the railways has a share of only 50m tonnes. With frequent diesel price hikes, road transport will become less and less cost effective.

Therefore, the dedicated supply chain can effectively prove to be significant revenue generator for the railways," said a railway ministry official.